The Motley Fool

This 1 TSX Growth Stock Is Crazy Cheap!

Image source: Getty Images

A stock market crash can mean trying times for investors. It can be easy to succumb to emotion and sell equities in a panic. However, the Foolish investor recognizes instead that this massive retreat in market-wide prices creates incredible buying opportunities. Namely, solid growth stocks should be high on the shopping lists for long-term investors — since those stocks stand to create enormous capital gains, as the markets recover and grow in the future.

When looking for growth stocks to snag for cheap, it’s important to consider the strength of the underlying businesses. You need to be confident the stock can withstand any short-term turbulence and still has positive long-term prospects.

This way, you are buying a truly undervalued stock and can reap the rewards, as the markets and economy recover.

Today, we’ll take a look at a top TSX growth stock that’s poised to weather the storm and continue growing in the future.

Shaw Communications

Shaw Communications (TSX:SJR.B)(NYSE:SJR) is an attractive growth stock at current market levels. Shaw is a Canadian telecom company based out of Calgary. It provides home internet, wi-fi, and mobile phone services to customers across North America.

While the company has yet to penetrate much of the home internet market outside Western Canada, its brand Freedom Mobile has quickly been snatching up customers in the mobile phone space across the country.

Shaw is still in the process of catching up to the network quality of its bigger peers. However, customers have shown they’re willing to make the switch.

Since Freedom offers much cheaper plans with increasingly similar coverage to the big networks, many consumers looking to save on their monthly bills have flocked to Freedom.

According to Shaw’s Q4 2019 report, revenues from wireless services grew by 12% year over year with increasing margins. If Shaw can continue double-digit growth in the wireless phone space, it will soon be a major player in Canada. Estimates from analysts suggest Shaw as a whole could see growth rates of 5% per year over the next five years.

Growth stock with a dividend

Not only is Shaw a well-positioned growth stock for the future, but it also pays an attractive dividend yield. As of writing, Shaw is trading at $18.55 and is yielding 6.41%. So, it has both the lowest P/E ratio and the highest yield when compared to BellRogers, and Telus.

Plus, Shaw’s dividend is one of the safer dividends on the TSX. With a profit margin of 13.17% and a payout ratio of 87.13%, Shaw also has a little wiggle room if times get tough in the near term.

With Shaw, you can get the best of both worlds. Firstly, you get exposure to a quickly-expanding growth stock looking to disrupt the triopoly in Canada’s mobile phone market. Plus, you get an extremely attractive dividend yield backed up by a healthy telecom business.

The bottom line

Seeking out discounted growth stocks is a highly profitable strategy while markets are in turmoil. One such growth stock is Shaw. With Shaw, investors are getting a piece of a rapidly growing mobile phone business (Freedom Mobile) and a great dividend to go with it.

With the currently deflated market prices, Shaw’s value proposition is very enticing to long-term investors focused on growth and stability. If you’re looking to scoop up cheap shares of growth stocks while the markets are hurting, be sure to keep an eye on Shaw.

This Tiny TSX Stock Could Be the Next Shopify

One little-known Canadian IPO has doubled in value in a matter of months, and renowned Canadian stock picker Iain Butler sees a potential millionaire-maker in waiting...
Because he thinks this fast-growing company looks a lot like Shopify, a stock Iain officially recommended 3 years ago - before it skyrocketed by 1,211%!
Iain and his team just published a detailed report on this tiny TSX stock. Find out how you can access the NEXT Shopify today!

Click here to discover how!

Fool contributor Jared Seguin has no position in any of the stocks mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.